CINCINNATI--(BUSINESS WIRE)-- Cintas Corporation (Nasdaq: CTAS) today reported results for its third quarter of fiscal year 2016 ended February 29, 2016.

Revenue for the third quarter of fiscal year 2016 was $1.216 billion, an increase of 9.7% over the prior year period. Organic growth, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 6.8%.

Operating income for the third quarter of fiscal year 2016 of $193.0 million increased 11.1% from the prior year period. Operating income margin improved to 15.9% from 15.7% of revenue in last year’s third quarter.

Net income from continuing operations for the third quarter of fiscal year 2016 was $117.3 million compared to $100.3 million in the prior year period, and earnings per diluted share (EPS) from continuing operations for the third quarter of fiscal year 2016 were $1.05 compared to $0.85 for the prior year period. Third quarter of fiscal 2016 net income and EPS from continuing operations increased 16.9% and 23.5%, respectively, compared to the prior year period. Net income from continuing operations as a percent of revenue improved to 9.6% from 9.0% in last fiscal year’s third quarter.

Since the beginning of fiscal year 2016, Cintas repurchased about 5.7 million shares under its buyback program at an aggregate cost of $482.9 million, including $100.0 million of repurchases in the third quarter. At the end of the third quarter, Cintas still has $280.0 million available under the current Board of Directors stock repurchase authorization.

Scott D. Farmer, Cintas’ Chief Executive Officer, stated, “We recently initiated our first national branding campaign and introduced our new tagline, Ready for the WorkdayTM. This new tagline speaks to the value we provide our customers in helping them prepare for their workdays, and we’re excited about the energy surrounding this campaign. Our third quarter results are a reflection of the success we’ve had in getting our customers Ready for the WorkdayTM.” Fiscal 2016 third quarter organic growth was 6.1% for the Uniform Rental and Facility Services reportable operating segment and 11.9% for the First Aid and Safety Services segment. Mr. Farmer added, “We continue to reach new businesses and add value to existing customers by addressing their specific needs with our innovative products and services. Our organic growth rates remain strong and well in excess of gross domestic product and employment growth. Our employees, whom we call partners, have done an outstanding job of being READYTM for our customers.”

As a result of our third quarter results, we are updating our annual guidance. We expect fiscal 2016 revenue to be in the range of $4.860 billion to $4.890 billion and fiscal 2016 EPS from continuing operations to be in the range of $3.98 to $4.03. This guidance does not include any potential deterioration in the U.S. economy or share buybacks.

The table below provides a comparison of fiscal 2015 revenue to our fiscal 2016 revenue guidance.

Fiscal 2016

Fiscal 2016

Updated Revenue Guidance

Low End

Growth vs.

High End

Growth vs.

(dollar amounts in millions)

Fiscal 2015

of Range

Fiscal 2015

of Range

Fiscal 2015

Revenue

$4,476.9

$4,860.0

8.6%

$4,890.0

9.2%

The table below provides a comparison of fiscal 2015 adjusted EPS to our fiscal 2016 EPS from continuing operations guidance. We present fiscal 2015 EPS as adjusted because we believe it is more representative of the ongoing performance of Cintas.

							Fiscal 2016								Fiscal 2016
							Low End				Growth vs.				High End				Growth vs.
EPS Guidance			Fiscal 2015				of Range				Fiscal 2015				of Range				Fiscal 2015
EPS, excluding below items			$	3.35			$	3.98			18.8	%			$	4.03			20.3	%
Impact of sale of stock in equity investment				0.11
Impact of discontinued operations				0.17
Total Reported Cintas EPS			$	3.63

About Cintas

Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types primarily throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, first aid and safety services and fire protection services. Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of the Standard & Poor’s 500 Index.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release. Factors that might cause such a difference include, but are not limited to, our ability to promptly and effectively integrate acquisitions, including ZEE Medical; our ability to realize any synergies from acquisitions, including ZEE Medical; the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions, including the acquisition of ZEE Medical; fluctuations in costs of materials and labor including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; the reactions of competitors in terms of price and service; the ultimate impact of the Affordable Care Act; and the finalization of our financial statements for the quarter ended February 29, 2016. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2015 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us or that we currently believe to be immaterial may also harm our business.

Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
			Three Months Ended
			February 29,					February 28,
			2016					2015					% Change
Revenue:
Uniform rental and facility services			$	936,565				$	883,401				6.0
Other				279,518					225,446				24.0
Total revenue				1,216,083					1,108,847				9.7
Costs and expenses:
Cost of uniform rental and facility services				524,656					501,273				4.7
Cost of other				166,819					132,267				26.1
Selling and administrative expenses				331,656					301,690				9.9
Operating income				192,952					173,617				11.1
Interest income				(335	)				(96	)			249.0
Interest expense				16,163					16,254				-0.6
Income before income taxes				177,124					157,459				12.5
Income taxes				59,845					57,128				4.8
Income from continuing operations				117,279					100,331				16.9
Income (loss) from discontinued operations, net of tax				62					(5,448	)			101.1
Net income			$	117,341				$	94,883				23.7
Basic earnings (loss) per share:
Continuing operations			$	1.07				$	0.86				24.4
Discontinued operations				0.00					(0.05	)			100.0
Basic earnings per share			$	1.07				$	0.81				32.1
Diluted earnings (loss) per share:
Continuing operations			$	1.05				$	0.85				23.5
Discontinued operations				0.00					(0.05	)			100.0
Diluted earnings per share			$	1.05				$	0.80				31.3
Weighted average number of shares outstanding				107,843					116,178
Diluted average number of shares outstanding				109,463					117,867
			Nine Months Ended
			February 29,					February 28,
			2016					2015					% Change
Revenue:
Uniform rental and facility services			$	2,812,677				$	2,648,574				6.2
Other				821,376					685,729				19.8
Total revenue				3,634,053					3,334,303				9.0
Costs and expenses:
Cost of uniform rental and facility services				1,569,250					1,497,771				4.8
Cost of other				488,651					401,855				21.6
Selling and administrative expenses				997,344					915,989				8.9
Operating income				578,808					518,688				11.6
Gain on sale of stock of an equity method investment				-					21,739				-100.0
Interest income				(565	)				(168	)			236.3
Interest expense				48,746					48,766				0.0
Income before income taxes				530,627					491,829				7.9
Income taxes				191,697					181,892				5.4
Income from continuing operations				338,930					309,937				9.4
Income from discontinued operations, net of tax				223,692					15,466				1346.3
Net income			$	562,622				$	325,403				72.9
Basic earnings per share:
Continuing operations			$	3.06				$	2.64				15.9
Discontinued operations				2.02					0.13				1,453.8
Basic earnings per share			$	5.08				$	2.77				83.4
Diluted earnings per share:
Continuing operations			$	3.01				$	2.60				15.8
Discontinued operations				1.99					0.13				1,430.8
Diluted earnings per share			$	5.00				$	2.73				83.2
Weighted average number of shares outstanding				108,923					116,653
Diluted average number of shares outstanding				110,612					118,214

CINTAS CORPORATION SUPPLEMENTAL DATA
			Three Months Ended
			February 29,				February 28,
			2016				2015
Uniform rental and facility services gross margin			44.0	%			43.3	%
Other gross margin			40.3	%			41.3	%
Total gross margin			43.1	%			42.9	%
Net margin, continuing operations			9.6	%			9.0	%
			Nine Months Ended
			February 29,				February 28,
			2016				2015
Uniform rental and facility services gross margin			44.2	%			43.4	%
Other gross margin			40.5	%			41.4	%
Total gross margin			43.4	%			43.0	%
Net margin, continuing operations			9.3	%			9.3	%

Computation of Diluted Earnings Per Share from Continuing Operations
			Three Months Ended
			February 29,				February 28,
			2016				2015
Income from continuing operations			$	117,279			$	100,331
Less: income from continuing operations allocated to participating securities				1,871				733
Income from continuing operations available to common shareholders			$	115,408			$	99,598
Basic weighted average common shares outstanding				107,843				116,178
Effect of dilutive securities - employee stock options				1,620				1,689
Diluted weighted average common shares outstanding				109,463				117,867
Diluted earnings per share from continuing operations			$	1.05			$	0.85
			Nine Months Ended
			February 29,				February 28,
			2016				2015
Income from continuing operations			$	338,930			$	309,937
Less: income from continuing operations allocated to participating securities				5,500				2,666
Income from continuing operations available to common shareholders			$	333,430			$	307,271
Basic weighted average common shares outstanding				108,923				116,653
Effect of dilutive securities - employee stock options				1,689				1,561
Diluted weighted average common shares outstanding				110,612				118,214
Diluted earnings per share from continuing operations			$	3.01			$	2.60

Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure
The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To supplement its consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides additional non-GAAP financial measures of revenue and related growth, gross margin, operating income, net income, earnings per diluted share, and cash flow. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. Reconciliations of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown in the tables within the narrative of the press release or below.
Computation of Workday Adjusted Revenue Growth
	Nine Months Ended
	February 29,			February 28,			Growth %
	2016			2015
	A			B			G
Revenue	$	3,634,053		$	3,334,303			9.0	%
							G=(A-B)/B
	C			D
Workdays in the period		196			195
	E			F			H
Revenue adjusted for workday difference	$	3,615,512		$	3,334,303			8.4	%
							H=(E-F)/F
	E=(A/C)*D			F=(B/D)*D
Management believes that workday adjusted revenue growth is valuable to investors because it reflects the revenue performance compared to a prior period with the same number of revenue generating days.
Computation of Free Cash Flow
				Nine Months Ended
				February 29,			February 28,
				2016			2015
Net Cash Provided by Operations				$	297,154		$	377,646
Capital Expenditures					(207,502	)		(163,040	)
Free Cash Flow				$	89,652		$	214,606
Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.
Results from Continuing Operations as Reported and as Adjusted
The tables below present summary results for the nine months ended February 29, 2016 and February 28, 2015, as reported and as adjusted. The adjustments between results as reported and as adjusted are explained below. We present net income from continuing operations and EPS from continuing operations, as adjusted, because we believe they are more representative of the ongoing performance of Cintas.
	As Reported
For the nine months ended February 29, 2016	(see Note 1)			Adjustments			As Adjusted			Increase
Net income, continuing operations	$	338,930		$	-		$	338,930		14.4	%
Net income margin, continuing operations		9.3	%					9.3	%
Diluted earnings per share, continuing operations	$	3.01		$	-		$	3.01		20.9	%
	As Reported			Adjustments
For the nine months ended February 28, 2015	(see Note 1)			(see Note 2)			As Adjusted
Net income, continuing operations	$	309,937		$	13,630		$	296,307
Net income margin, continuing operations		9.3	%					8.9	%
Diluted earnings per share, continuing operations	$	2.60		$	0.11		$	2.49
Note 1 - The "As Reported" figures for both fiscal 2016 and 2015 reflect the change in classification of the Document Storage and Imaging business and the investment in the Shred-it Partnership to discontinued operations within the Consolidated Condensed Statements of Income.
Note 2 - During the fiscal 2015 first quarter, Cintas recognized a gain on the sale of stock in an equity method investment in the net amount of $13.6 million, equal to EPS of $0.11.

SUPPLEMENTAL SEGMENT DATA
The results below reflect the segments effective June 1, 2015 as previously described. All prior fiscal year results presented below have been restated to reflect these new segments.
	Uniform
	Rental and		First Aid
	Facility		and Safety		All
	Services		Services		Other		Corporate1			Total
For the three months ended February 29, 2016
Revenue	$	936,565	$	119,064	$	160,454	$	-		$	1,216,083
Gross margin	$	411,909	$	50,241	$	62,458	$	-		$	524,608
Selling and administrative expenses	$	244,407	$	37,607	$	49,642	$	-		$	331,656
Interest income	$	-	$	-	$	-	$	(335	)	$	(335	)
Interest expense	$	-	$	-	$	-	$	16,163		$	16,163
Income (loss) before income taxes	$	167,502	$	12,634	$	12,816	$	(15,828	)	$	177,124
For the three months ended February 28, 2015
Revenue	$	883,401	$	79,471	$	145,975	$	-		$	1,108,847
Gross margin	$	382,128	$	37,584	$	55,595	$	-		$	475,307
Selling and administrative expenses	$	229,963	$	26,286	$	45,441	$	-		$	301,690
Interest income	$	-	$	-	$	-	$	(96	)	$	(96	)
Interest expense	$	-	$	-	$	-	$	16,254		$	16,254
Income (loss) before income taxes	$	152,165	$	11,298	$	10,154	$	(16,158	)	$	157,459
As of and for the nine months ended February 29, 2016
Revenue	$	2,812,677	$	338,990	$	482,386	$	-		$	3,634,053
Gross margin	$	1,243,427	$	144,379	$	188,346	$	-		$	1,576,152
Selling and administrative expenses	$	741,249	$	108,306	$	147,789	$	-		$	997,344
Interest income	$	-	$	-	$	-	$	(565	)	$	(565	)
Interest expense	$	-	$	-	$	-	$	48,746		$	48,746
Income (loss) before income taxes	$	502,178	$	36,073	$	40,557	$	(48,181	)	$	530,627
Assets	$	3,050,138	$	436,390	$	357,863	$	386,819		$	4,231,210
As of and for the nine months ended February 28, 2015
Revenue	$	2,648,574	$	241,666	$	444,063	$	-		$	3,334,303
Gross margin	$	1,150,803	$	112,635	$	171,239	$	-		$	1,434,677
Selling and administrative expenses	$	694,255	$	80,413	$	141,321	$	-		$	915,989
Gain on sale of stock of an equity method investment							$	21,739		$	21,739
Interest income	$	-	$	-	$	-	$	(168	)	$	(168	)
Interest expense	$	-	$	-	$	-	$	48,766		$	48,766
Income (loss) before income taxes	$	456,548	$	32,222	$	29,918	$	(26,859	)	$	491,829
Assets	$	2,908,813	$	264,357	$	340,705	$	752,471		$	4,266,346
(1) Corporate Assets include cash and marketable securities in all periods. Corporate Assets as of February 28, 2015 include the investment in the Shred-it Partnership and the Storage assets that were classified as Assets Held for Sale.

Cintas Corporation
Consolidated Balance Sheets
(In thousands except share data)
									February 29,					May 31,
ASSETS									2016					2015
									(unaudited)
Current assets:
	Cash and cash equivalents								$	315,116				$	417,073
	Marketable securities									71,703					16,081
	Accounts receivable, net									550,748					496,130
	Inventories, net									255,203					226,211
	Uniforms and other rental items in service									539,401					534,005
	Income taxes, current									-					936
	Deferred tax asset														-
	Assets held for sale									-					21,341
	Prepaid expenses and other current assets									26,653					24,030
		Total current assets								1,758,824					1,735,807
Property and equipment, at cost, net										964,680					871,421
Investments										118,607					329,692
Goodwill										1,284,434					1,195,612
Service contracts, net										86,380					42,434
Other assets, net										18,285					17,494
									$	4,231,210				$	4,192,460
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable								$	151,833				$	109,607
	Accrued compensation and related liabilities									84,992					88,423
	Accrued liabilities									319,438					309,935
	Income taxes, current									52,541					-
	Deferred tax liability														-
	Liabilities held for sale									-					704
	Long-term debt due within one year									250,000					-
		Total current liabilities								858,804					508,669
Long-term liabilities:
	Long-term debt due after one year									1,050,000					1,300,000
	Deferred income taxes									240,714					339,327
	Accrued liabilities									131,586					112,009
		Total long-term liabilities								1,422,300					1,751,336
Shareholders' equity:
	Preferred stock, no par value:									-					-
		100,000 shares authorized, none outstanding
	Common stock, no par value:									399,927					329,248
		425,000,000 shares authorized
		FY16: 179,368,804 issued and 107,064,235 outstanding
		FY15: 178,117,334 issued and 111,702,949 outstanding
	Paid-in capital									184,442					157,183
	Retained earnings									4,674,975					4,227,620
	Treasury stock:									(3,275,564	)				(2,773,125	)
		FY16: 72,304,569 shares
		FY15: 66,414,385 shares
	Accumulated other comprehensive loss									(33,674	)				(8,471	)
		Total shareholders' equity								1,950,106					1,932,455
									$	4,231,210				$	4,192,460

Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
					Nine Months Ended
Cash flows from operating activities:					February 29,					February 28,
					2016					2015
Net income					$	562,622				$	325,403
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation						110,535					104,950
Amortization of intangible assets						12,136					11,090
Stock-based compensation						57,169					36,016
Gain on Storage Transactions						(15,786	)				(35,036	)
Loss on investment in Shred-it Partnership						24,288					4,570
Gain on sale of investment in Shred-it Partnership						(374,026	)				-
Gain on sale of stock of an equity method investment						-					(21,739	)
Deferred income taxes						(74,540	)				15,428
Change in current assets and liabilities, net of
acquisitions of businesses:
	Accounts receivable, net					(41,523	)				(3,168	)
	Inventories, net					(24,009	)				15,370
	Uniforms and other rental items in service					(6,905	)				(22,203	)
	Prepaid expenses and other current assets					(1,580	)				(1,609	)
	Accounts payable					37,370					(33,615	)
	Accrued compensation and related liabilities					(3,731	)				(7,086	)
	Accrued liabilities and other					(18,301	)				1,841
	Income taxes, current					53,435					(12,566	)
Net cash provided by operating activities						297,154					377,646
Cash flows from investing activities:
Capital expenditures						(207,502	)				(163,040	)
Proceeds from redemption of marketable securities						327,779					18,711
Purchase of marketable securities and investments						(384,796	)				(79,947	)
Proceeds from Storage Transactions, net of cash contributed						35,338					154,891
Proceeds from Shredding Transactions						578,257					3,344
Proceeds from sale of stock of an equity method investment						-					29,933
Dividends received on equity method investment						-					5,247
Acquisitions of businesses, net of cash acquired						(151,731	)				(13,798	)
Other, net						4,433					1,583
Net cash provided by (used in) investing activities						201,778					(43,076	)
Cash flows from financing activities:
Repayment of debt						(16	)				(456	)
Proceeds from exercise of stock-based compensation awards						22,260					31,956
Dividends paid						(115,273	)				(201,941	)
Repurchase of common stock						(502,439	)				(314,648	)
Other, net						1,153					3,139
Net cash used in financing activities						(594,315	)				(481,950	)
Effect of exchange rate changes on cash and cash equivalents						(6,574	)				(7,588	)
Net decrease in cash and cash equivalents						(101,957	)				(154,968	)
Cash and cash equivalents at beginning of period						417,073					513,288
Cash and cash equivalents at end of period					$	315,116				$	358,320

View source version on businesswire.com: http://www.businesswire.com/news/home/20160322006531/en/

Cintas Corporation

J. Michael Hansen, Vice President-Finance and Chief Financial Officer – 513-701-2079

or

Paul F. Adler, Vice President and Treasurer – 513-573-4195

Source: Cintas Corporation

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